Stocks and bonds rallied while the dollar fell in Asia trade on Monday following a peace deal between the U.S. and Iran to reopen the Strait of Hormuz and lift the U.S. blockade on Iran, according to livemint.com. U.S. crude futures dropped more than 4%, S&P 500 futures rose about 0.8%, and the yen and euro strengthened against the dollar.
The deal, announced on June 15, was anticipated by markets, leading to a contained reaction. Jason Wong, senior markets strategist at BNZ in Wellington, said the market was largely prepared for the development and viewed it as a positive step to move past geopolitical tensions. The reopening of the Strait of Hormuz, a critical oil shipping route, is expected to ease supply concerns that had driven oil prices higher.
The agreement is significant given the Strait of Hormuz’s role in global oil transportation, with about a fifth of the world’s petroleum passing through it. The U.S. blockade on Iran had contributed to elevated oil prices and market volatility. The deal's impact on oil futures and currency markets underscores the interconnectedness of geopolitical events and global financial markets, as seen in the immediate market response.
Following the announcement, U.S. crude futures fell by over 4%, while the S&P 500 futures gained approximately 0.8%. The dollar weakened broadly, with the yen reaching 159.7 per dollar and the euro climbing to $1.1616, reflecting investor optimism tied to the deal, according to livemint.com.